Opportunity Zone funding is intended to accelerate the growth of the Proximity Network
Proximity has announced that our newest round of funding includes investment placed from a Qualified Opportunity Zone Fund. In accordance with the most recent guidance issued by the U.S. Department of the Treasury in April, the equity investment is eligible for investor tax incentives designed to attract funding to Qualified Opportunity Zones.
Proximity’s headquarters and primary operations are based in Montrose and Grand Junction, areas of western Colorado designated as Opportunity Zones under the 2017 Federal Tax Cut and Jobs Act. By offering tax incentives to investors, the legislation is designed to draw funding to low-income areas throughout the U.S. as determined by census data. Investments are intended to support diversified economic growth in regions that may have limited access to local, long-term capital.
Funding in Opportunity Zones initially took shape in the form of real estate in order to secure long-term investment for businesses in designated locations. However, the newly issued guidance allows broader use of investment dollars as long as Opportunity Zone businesses qualify under specific criteria for how revenue is generated and where business assets are located. For Proximity, clarified guidance opens new opportunities for growth.
“There’s a lot of new activity taking place in western Colorado,” says Josh Freed, Chief Executive Officer of Proximity. “Opportunity Zone funding is a tremendous advantage for us, and we’re thrilled to move forward with a growth plan that allows us to reach more coworking spaces, new international markets, and continue the expansion of the Proximity Network.”
According to Gregory W. Berger of Denver law firm Brownstein Hyatt Farber Schreck, LLP, the recent Opportunity Zone guidance has unlocked new potential for investors to fund businesses in a more flexible way that’s not limited to real estate investment.
“Until the second set of proposed regulations were released in April, it was unclear how businesses could comply with the Opportunity Zone requirements,” says Berger. “The newly proposed regulations provide much-needed guidance on how to determine whether a business is located in an Opportunity Zone, especially if it has a workforce, customers, or assets across a wide region.”
For impact investors who want to make long-term investments that consider both social and economic factors, Opportunity Zones can be a good fit, Berger says.
“Tax benefits are available to those who hold their interest in an Opportunity Fund for at least 10 years. Investors do not have to give up a market rate of return and sometimes, when taking the tax benefits into account, might do much better. There still must be discipline in assessing each investment. Opportunity Zone tax incentives won’t make a bad investment good, but it will make a good investment great.”
For investors and businesses learning how to navigate Opportunity Zone benefits and eligibility, Berger recommends starting with state and local economic development offices.
“Colorado has been at the forefront of this effort and our Office of Economic Development and International Trade has tremendous resources. There has also been an effort in Colorado to engage municipalities and local economic development offices. Other states have similar efforts, but Colorado has been a model.”